Income reimagined: expanding DC from saving to spending

Income reimagined: expanding DC
from saving to spending

While urgency has grown over the last decade to provide sustainable retirement income solutions within DC plans, demographic trends have also made retirement more expensive to fund. Longer lives translate to more years in retirement.

With little guidance on how to sustainably spend down their workplace nest eggs, many participants are now looking to plan sponsors to help answer the question: “How do I make my money last?”

Some plan sponsors, providers and legislators are showing growing interest in providing guaranteed or income annuity options within DC plans. But so far no consensus approach has emerged, and despite the rational case that can be made for lifetime income solutions, a number of participant biases and behavioral financial barriers need to be overcome to drive adoption.

Survey data shows that participants are interested in income solutions, but modest uptake suggests they are not.1 Yet when they do choose income, the surveys suggest that they are more satisfied than those who try to manage retirement spending on their own.


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